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Scottish Oil industry hit by UK tax increase

Oil and gas businesses in the North Sea warn thousands of jobs are at risk after UK government announces new £2billion tax on the industry.

Oil and gas businesses in the North Sea warn thousands of jobs are at risk after UK government announces new £2billion tax on the industry.

UK Chancellor George Osborne unveiled Budget plans to raise £2billion (€2.2billion) taxes on oil production to pay for a reduction in petrol costs for motorists.

In response to the recent surge in global oil prices, Mr Osborne cut 1pence (1.1cent) per litre in fuel duty but announced the measure would be financed by taxing the North Sea oil and gas industry.

The Scottish oil industry said the tax increase would have a damaging effect on investment and jobs.

The Chief Executive of Aberdeen and Grampian Chamber of Commerce, Bob Collier, said: "The (UK) government's announcement that it is going to increase taxation on the oil and gas sector, which operates in a globally competitive market, is a short-sighted and potentially very damaging approach."

"Businesses working in the North Sea are already among the most highly-taxed in the country and rather than increasing that, government should be looking to reduce that tax burden to encourage development of new, smaller fields and continued production of mature, depleted fields."

The Scottish Government's finance secretary, John Swinney, who had also been calling for a reduction in petrol costs for motorists, urged the UK government not to disadvantage the Scottish oil sector.

"Fuel in the last 12 months has gone up by over 25pence a litre, and the chancellor reduced the cost of fuel by 1pence a litre", said Mr Swinney, who criticised the UK Chancellor saying that if the extra revenues being used to cut duty were applied in Scotland alone, petrol prices could be slashed by 50pence.

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